James O’Doherty: NSW Government has faced the coal hard facts on power supply

Even before the election, Chris Minns was talking about extending Eraring Power Plant’s life. This week he received the evidence he needed to finally make a call, writes James O’Doherty.

As a leading figure of Labor’s left faction, Energy Minister Penny Sharpe is perhaps an unlikely ally of Australia’s largest coal-fired power plant.

Even more unlikely is the Liberal-National Coalition arguing on the same side as the Greens when it comes to energy policy.

Yet, somehow, that is where we are, with the Minns government working to keep Newcastle’s Eraring power plant open to guard against blackouts while Opposition Leader Mark Speakman argues we should just roll the dice.

Sharpe’s announcement on Tuesday that the government would enter talks with Origin to keep Eraring open longer was a long time coming.

Even before the election, Premier Chris Minns was talking about extending Eraring’s life to keep enough power in the system while renewable energy comes online.

This week, the government received the evidence it needed to finally make a call.

Firstly, a report by former Energy bureaucrat (and one-time Labor staffer) Cameron O’Reilly warned that if Eraring closed in August 2025, then NSW could cop price hikes or blackouts.

NSW Environment Minister Penny Sharpe at a press conference to talk about Eraring. Picture: NCA Newswire / Gaye Gerard

“Under any circumstances, replacing a plant like Eraring that provides around 20 per cent of the state’s delivered electricity would have been extremely challenging,” the report says.

The fact that Origin brought forward Eraring’s planned closure by seven years made the problem even worse.

“With just three-and-a-half years’ notice, it is almost impossible without reliability and affordability impacts,” O’Reilly’s report says.

Former Energy Minister Matt Kean’s approach was to try to fast-track renewable energy projects to replace the majority of NSW’s power generation.

The repeated delays and blowouts to Snowy 2.0 and the almighty fracas between the state government and farmers over high-voltage transmission lines shows just how well that plan is going.

“Given the multiple headwinds, the likelihood of success is low,” O’Reilly’s report euphemistically says.

More significantly, the Australian Energy Market Operator has also warned of reliability risks unless Eraring stays open longer.

Premier Chris Minns (inset) says we need to keep Eraring open for longer to ensure electricity supply in NSW.

The Minns government delayed the release of O’Reilly’s report until AEMO released its latest “statement of opportunities” report, which found that keeping half of Eraring’s power generators online until 2027 would reduce reliability risks.

Keeping the state’s main source of electricity operating longer to ensure the energy grid remains stable and reliable makes sense. Right?

Not so, says the Liberal Leader.

In a slow-motion car crash live on Sky News on Thursday, Speakman likened AEMO’s “reliability standard” to an insurance company’s “comfort margin”.

“There’s already, in that reliability standard, … a huge margin of comfort,” he said.

On the one hand he argued that risks of blackouts would be unacceptable but that reliability risks are no big deal.

“If Eraring has to be extended, so be it, but the government has not laid out the case, it hasn’t made the case that this is the cheapest and safest and most reliable and most affordable way of doing it,” Speakman said.

It is no coincidence that the Liberal leader’s each-way bet came days after the former Energy Minister declared keeping Eraring open would be a $3 billion waste of money.

Kean’s intervention effectively wedged the Liberals into arguing against any need to keep Eraring open.

Asked on Tuesday if he thought Eraring needed to stay open, Kean said: “I back the AEMO which states if the renewable road map is delivered there will be no energy supply shortfall”.

“I note today the energy minister confirmed road map projects were on schedule, including the Waratah Super Battery,” he said.

The interventions did not go down well with Kean’s colleagues, who think he should butt out of his former portfolio. Kean’s arguments would be more at home in Newtown than in Newcastle, while the Labor Party is trying to take a pragmatic approach.

It is not all good news for fossil fuels under Labor: a decision this week to hike coal taxes by some 30 per cent to raise billions of dollars will go some way to appeasing the more progressive elements of the party’s base.

And Sharpe has insisted that she wants to get out of coal “as soon as possible”.

But the fact remains, she has found herself coming to the rescue of coal-fired power in a bid to keep the lights on.